The outlook of this currency pair will be dependent on how effectively each economy implements its monetary policy regime. Developed economies spent most of 2014 in the midst of modern day currency wars, with both economies exporting deflationary pressures abroad, through depreciation of their currencies. After a period of passivity, the ECB have finally embarked on an aggressive quantitative easing program to the tune of 60 billion euros per month of both public and private debt. The addition of the Greek headache adds further uncertainty to the Eurozone economies as political issues drive fundamentals. Given this backdrop, there are considerable long-term investment opportunities in the EUR/JPY.
Investors Notes:
- The Japanese economy has been showing signs of price growth, largely facilitated by a depreciated currency positively impacting exports.
- The Bank of Japan announced there will be no further monetary stimulus this year, indicating they do not believe the economy requires the support.
- The yen is regaining its position as a safe haven currency, particularly after the Swiss National Bank abandoned the peg to the euro.
- A range of momentum indicators suggest a bearish outlook for the currency pair; a range of moving averages are down trending, with a bearish crossover on MACD.
- Banc De Binary analysts predict that the downward trend will continue, indicating a potential long-term downward movement in the EUR/JPY.